Macy's Beats, But Investors Balk
Even good news from the retailer can't shake off the negative mood.
A startlingly high unemployment rate of 10.2% and a continuing stream of so-so economic news have kept shoppers at home and their wallets firmly shut, but some better-than-expected news from the big-name stores could mean a somewhat happier holiday season after all -- or so the stores say.
Investors, however, aren't quite as optimistic.
Department stores have been hit especially hard as the economic malaise drags on. Consumers have virtually stopped all discretionary spending, opting to only buy necessities. While the number of people losing their jobs has slowed, the recessionary mindset is now deeply imbedded into the American psyche.
Earnings reports from major retailers like Macy's (M), which owns its eponymous department stores as well as the Bloomingdale's stores, haven't been particularly blessed over the last year, but smaller-than-expected losses and some sunny outlooks could mean that all hope is not lost.
Macy's reported third-quarter earnings before the bell on Wednesday. Sales were down 3.9% from the same period a year ago to $5.3 billion, slightly beating analysts' expectations of $5.25 billion.
The retailer lost $0.03 per share, excluding restructuring costs, besting a loss of $0.08 per share in the year-prior and beating analyst expectations by $0.04.
It also opened four new stores and re-opened two locations that were closed due to hurricane damage last year during the third quarter.
"Given the difficult economic climate, we had an excellent quarter," said Macy's Chairman Terry J. Lundgren. "Our business improved progressively each month during the period and we are entering the holiday selling season confident in our locally-focused organizational structure and the high caliber of our talent."
While sales were still down during the quarter, the department store giant expects a slightly brighter end to the year.
Macy's upped its guidance for the full year to $1.01 to $1.06 per share, excluding restructuring-related costs, from the previous forecast of $0.70 to $0.80 per share that was given in August. But this didn't please investors or analysts who had expected earnings per share of $1.11 for the year, on average.
Shares of Macy's fell by more than 8% in afternoon trading.
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